Wednesday December 07, 2005 
Wednesday December 07, 2005
peakoil.com -> bloomberg.com :
In the U.S. bond market, the housing bubble has burst. Bonds backed by home loans to the riskiest borrowers, the fastest growing part of the $7.6 trillion mortgage market, have lost about 2.5 percent since September on concern an 18-month rise in interest rates may force more than 150,000 consumers to default.
The slump in the bonds is one of the first signs the housing boom is ending after the Federal Reserve's 12 interest-rate increases. Real estate has accounted for about half the economy's growth since 2001, according to Merrill Lynch & Co.
The Fed is signaling that it's unlikely to stop lifting borrowing costs until housing cools. "Froth" in housing markets may be spilling over into mortgage markets, Fed Chairman Alan Greenspan warned an American Bankers Association convention in September. A rise in interest-only loans that initially don't pay down principle and the introduction of "exotic" variable-rate mortgages "are developments that bear close scrutiny," he said.
See also :
1. peakoil.com -> money.cnn.com : "Take this house and shove it"
(2005-12-07 13:26:47 SGT)
[Biz]
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